Wheeler's Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow: Bike parts Factory machinery depreciation Factory supervisor salaries Factory direct labor Factory supplies Factory property tax Advertising cost Administrative salaries Administrative-related depreciation Total expected costs $ 339,800 56,500 143,500 210,780 39,900 34,250 25,500 49,500 19,700 $919,430 Required: 1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $11.71 per hour. 2. Determine the amount of applied overhead if 17,900 actual hours are worked in the upcoming year.
Wheeler's Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow: Bike parts Factory machinery depreciation Factory supervisor salaries Factory direct labor Factory supplies Factory property tax Advertising cost Administrative salaries Administrative-related depreciation Total expected costs $ 339,800 56,500 143,500 210,780 39,900 34,250 25,500 49,500 19,700 $919,430 Required: 1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $11.71 per hour. 2. Determine the amount of applied overhead if 17,900 actual hours are worked in the upcoming year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Wheeler's Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of
each bike. Estimated costs and expenses for the coming year follow:
Bike parts
Factory machinery depreciation
Factory supervisor salaries
Factory direct labor
Factory supplies
Factory property tax
Advertising cost
Administrative salaries
Administrative-related depreciation
Total expected costs
$ 339,800
56,500
143,500
210,780
39,900
34,250
25,500
49,500
19,700
$919,430
Required:
1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $11.71 per hour.
2. Determine the amount of applied overhead if 17,900 actual hours are worked in the upcoming year.
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